This study empirically examined the firm performance consequences of exploitation and exploration, based on the longitudinal analysis of 80 small and medium-sized enterprises (SMEs) in the Korean electronic parts industry during the period of 1995-2004. The analysis includes the main effects of exploitation and exploration, and their moderation effects on the firm performances. The dependent variables includes sales growth rate and return on sales (ROS), and their time intervals cover from year t, in which exploitation and exploration occur, to three year after year t(i.e. t+3). Exploitation and exploration are operationalized as the exploitative and exploratory efforts of technological learning in year t, rather than the exploitative and exploratory outcomes of technological learning. Jacobsson, Oskarsson &Philipson(1996) discussed the limitations of outcome-based indicators of technological learning,and suggested R&D personnel-based indicators. This study uses the information concern R&D personnel on the exploitative and exploratory R&D activities during the period of 1996-2001. The results of multiple regression analyses reveal that (1) although significant level and the strength of the relationship are relatively weak, exploitation has a reverse U-shaped relationship with ROS(t+2) in year t+2. It has no relationships with ROS(t) in year t and ROS(t+1) in year t+1, and it has a positive relationship with ROS(t+3) in year t+3. (2)exploration has a reverse U-shaped relationship with sales growth rate(t+3) in year t+3. However, It has an U-shaped relationship with sales growth rate(t) in year t, and it has a positive relationship with sales growth rate(t+1) in year t+1. It has no relationships with sales growth rate(t+2) in year t+2. (3) the interaction term of exploitation and exploration has a negative impact on the sales growth rate(t) in year t. It has no relationships with sales growth rates in other years. They means that there is only negative moderation effect of exploitation and exploration on the sales growth rate. These findings suggest that exploitation and exploration have different impacts on the different performance indicators such as sales growth rate and ROS. The results show the complementarity of exploitation and exploration, and support O'Reilly & Tushman (2004)'s conjectures, which argue that the strategic intent of exploitative business units are cost or profit, and those of exploratory business units are growth or innovation in the firm with structurally-separated exploitative and exploratory business units. The negative moderation effect also shows that the ambidextrous management of exploitation and exploration is very difficult since they are based on the different logics, different systems, and different cultures. Prior studies usually presented empirical results of positive moderation effect(e.g. He &Wong, 2004; Katila & Ahuja, 2002). They only guessed that the negative moderation effect of exploitation and exploration might occur in the firm without ambidextrous capabilities (Tushman & O'Reilly, 1996). To sum up, this study shows the paradox underlying the concepts of exploitation and exploration(March, 1991; Tushman & O'Reilly, 1996). Firms need exploitation for profitability goal or short-term performance, and need exploration for growth goal or longterm performance, but the simultaneous pursuit of them may be harmful to firms. Finally, the limitations of this study and future research directions are discussed.